Western GeoPower Corp. (Western GeoPower) has entered into a new $11 million secured loan facility. The proceeds of the loan may be used for drilling, project management, development cost, plant equipment, and up to $300,000 in monthly working capital and general corporate purposes. As partial consideration for entering into the loan facility, the company has agreed to issue 43,495,543 warrants of the company.
Under the terms of the loan facility, the initial tranche of $7 million will be available to the company upon receipt of approval of the TSX Venture Exchange for the issuance of warrants and the payment of certain lending fees and expenses. The second tranche of $4 million will be available to the company when all conditions precedent to that tranche have been met, including the perfection of security, the discharge of any liens other than permitted liens, payment of certain lending fees and expenses, and that no event of default then exists. Interest will be payable at a rate of 1% for the first six months, 1.25% for the second six months and 1.5% thereafter.
Each warrant being issued by the company is exercisable for a period of 24 months at a price per warrant of $0.14. The warrants and underlying shares will be subject to a hold period of four months following their issuance.
On November 7, 2008, the company entered into an initial $11 million secured loan facility, which has been fully drawn upon by the company.